The Stakes Have Changed Since 2009

Jimmy Fallon isn't expected to attract Jay Leno-size audiences when he takes over "The Tonight Show" on Monday.

And that's O.K.

The ascension of Mr. Fallon, 39, to "The Tonight Show" throne represents a new era in late-night viewing, one where advertisers value a show's total audience -- its viral video viewers and Twitter followers along with the TV watchers being lulled to sleep by topical monologues and skits.

After some initial sampling, in part thanks to NBC's massive promotional campaign, Mr. Fallon's "The Tonight Show" will most likely attract a total audience similar to CBS's "The Late Show with David Letterman" and ABC's "Jimmy Kimmel Live!," according to Billie Gold, VP–director of buying and programming research, Carat. "Late Night with Jimmy Fallon" averaged 1.7 million viewers last year, while Mr. Kimmel pulled 2.4 million and Mr. Letterman was watched by 2.8 million. "The Tonight Show" averaged 3.5 million viewers.

It's that kind of drop in viewers that caused NBC to reverse its 2009 Leno succession plan when Conan O'Brien took the reins of "The Tonight Show" for just seven months. But a lot has changed in four short years.

Aside from a generally stronger NBC prime-time schedule, the TV landscape is "completely different" than it was then, said Courtney Burke Maron, senior VP-integrated investments, UM. "Thanks to social media, people have turned back to live viewing for any event or 'water cooler' show that their friends would talk about the following day," she said. Mr. Fallon's enthusiastic acceptance of the digital landscape, along with his overall likability, makes him poised for long-term success.

"Jimmy Fallon has had more exposure than Conan, is a more-versatile performer, and has proven his ability to reach audiences online as well as offline," said Chris Geraci, president, national broadcast, OMD.

Many expect Mr. Fallon will be able to deliver younger, more desirable viewers. Already he delivers the youngest median age in broadcast.

Audience composition can matter as much as size, said Sam Armando, senior VP-director of strategic intelligence at Publicis Groupe's SMGx. "If [Mr. Fallon] gets a more gender-balanced [audience] and attracts a younger, harder-to-reach audience, even if total audience shrinks, it can still be a win."

Online following
With more than 11 million Twitter followers, Mr. Fallon has a built-in audience with whom he speaks every day, all day, not just for an hour a night, said Ms. Maron. In comparison, Mr. O'Brien has nearly 10 million followers; Jimmy Kimmel 3.6 million and Mr. Leno just 649,000. Cable rivals Stephen Colbert and Jon Stewart boast 5.9 million and 2.2 million followers, respectively.

Mr. Fallon, who was known for his six-year stint at "Saturday Night Live" before taking over "Late Night," carved a place for himself with musical impersonations that have amassed a huge online following. His #Hashtag skit with Justin Timberlake has been viewed more than 21 million times on "Late Night's" YouTube channel in four months.

Mr. Fallon's musical skits also lend themselves to a digital afterlife, Mr. Geraci said. "That music aspect is of critical importance in making him appear younger."

This is essential for NBC, especially after ABC moved "Jimmy Kimmel Live" to 11:35 p.m. from midnight last year. Mr. Kimmel has also seen his stunts, like "Jimmy Surprises Bieber Fan," become viral hits; that video has generated over 53 million views since 2010.

"Cross-platform and viral videos are a necessity for a show like that to succeed… [and] to reach a digital audience that isn't watching on TV," said David Campanelli, senior VP- national broadcast, Horizon Media.

Over last year, NBC has been expanding the social presence of its late-night properties, which also include "SNL" and "Last Call with Carson Daly," beyond just Twitter, using platforms like Instagram and Pinterest, said Scott Schiller, exec VP-digital advertising sales, NBC Universal.

"Of all the TV genres, late-night is the most ripe for innovation [due to] the mix of talent, social power and consumer engagement. Content is viral and interactive in nature," Mr. Schiller said.

While younger viewers are expected to follow Mr. Fallon to "The Tonight Show," it's far from clear how many older viewers who watched Mr. Leno will stay.

Older demo exodus
Ms. Gold expects there to be a meaningful exodus of older viewers out of "The Tonight Show" when Mr. Fallon takes over. The question is where they will go.

While some may shift to Mr. Letterman, Ms. Gold isn't expecting any of the late-night hosts to see a significant boost in ratings due to the change.

"Advertisers looking to target the older demo are taking a wait-and-see approach to see how much the audience ages down," Ms. Gold said. "We are expecting to lose GRPs [gross ratings points] and don't know where they are going to go."

Ms. Gold also warns that Mr. Kimmel's median age increased when he moved from midnight to 11:35 p.m., and notes that neither Mr. Kimmel's nor Mr. Fallon's viral successes have noticeably translated into TV ratings.

The proliferation of late-night shows and hosts has significantly fragmented the audience. There are currently at least seven shows in the genre competing in the 11 p.m. to 12 p.m. hour, dividing audiences and diluting ratings. In Mr. Leno's last full year, "The Tonight Show" averaged 3.5 million viewers, for example, down from his peak of about 6 million in the '90s.

For advertisers, this means there's isn't any one host who they must align themselves with. Advertisers that typically buy time in late-night spread budgets across several shows and personalities, Mr. Geraci said.

"There's an equalization of cable and broadcast in late-night. We don't look at 'Daily Show' any different than 'Letterman;' [we] value all of late-night the same way," Mr. Campanelli said.

Advertiser-friendly
Still, the advertising community is optimistic about jovial Mr. Fallon at the helm. "Fallon is very advertiser-friendly," Mr. Campanelli said.

In comparison, Mr. Leno has been less willing to accommodate advertisers, according to media buyers. "Although Leno was the No. 1 late-night show for so many years he didn't give the marketplace a lot of live, on-air sponsorships; he called his own shots," said Marc Morse, senior VP-national broadcast, RJ Palmer.

Mr. Fallon is also considered to be more current and "in-the-moment" than Mr. Leno, whose jokes on his last night included one about O.J. Simpson.

Advertisers have an invested interest in seeing Mr. Fallon succeed. While late-night isn't cheap, it is highly attractive for brands. "It has all the things that are appealing in TV right now: it's live, there's new content every day and it is culturally relevant," Mr. Gordon said.